Friday, January 22, 2016

Natural Gas: EIA Weekly Supply/Demand Report

Right now supply is swamping demand despite natural gas almost topping coal as the power burn fuel of choice.
Front futures $2.139 up 0.001.

From the Energy Information Administration:

In the News:

Consumption of natural gas for power generation at record highs
Since January 1, consumption of natural gas for electric power
generation (power burn) has averaged 26.0 billion cubic feet per day
(Bcf/d), 24% greater than the five-year average and 3% higher than the
five-year maximum. While power consumption is typically highest in
summer to meet air-conditioning demand, about 39% of all households in
the United States rely on electricity as their primary heating source.
In the Southeast, where most of the homes use electricity for space
heating, natural gas is a relatively large share of the generation mix.
However, the growth in power burn this month has occurred despite
electricity-weighted heating degree days that were close-to-average
nationally and in the Southeast region.

Low natural gas prices and growth in natural gas power generation
infrastructure are the main drivers in the consumption growth. This is a
continuation of a trend, with 2015 being a record-high year for power
burn, according to preliminary Bentek data. Bentek estimated that power
burn averaged 26.4 Bcf/d in 2015, 6.8% greater than the next-highest
annual average, in 2012.

Nationwide, natural gas-fired generation has been rising, as coal has declined as a share of total generation. In 2015, coal plant retirements
accelerated as the Environmental Protection Agency's (EPA) Mercury and
Air Toxics Standards (MATS) rules were implemented. Through October
2015, around 11 GW of coal-fired generation was retired, although this
generation was likely already running at a reduced capacity factor,
meaning that those plants were active for fewer hours a day than before....MUCH MORE

...Production rises. Dry natural gas production rose
0.3% week-on-week, according to Bentek Energy. Imports of natural gas
from Canada to the United States rose 10.7% from last week, contributing
an additional 0.6 Bcf/d of supply. LNG sendout rose 75.6% this week, as
Cove Point LNG facility in Maryland re-gasified some of its stocks to
meet elevated consumption. Overall supply was up 1.6% week-on-week.

Consumption rises. Total U.S. consumption rose 3.1%
week-on-week, according to Bentek data. Residential and commercial
consumption drove the increase, rising 7.9%, or 3.8 Bcf/d over the
report week. As typically happens in cold weather, industrial
consumption also rose, increasing by 1.3%. Power burn, though still
elevated compared to last year at this time, fell slightly this week,
decreasing by 3.0%. The decrease in power burn was driven by the
Southwest, which experienced more mild temperatures this report week
compared to last. Exports to Mexico fell somewhat, declining by 4.5%
for the period....

Well (so to speak) it's been six days since "Natural Gas: EIA Weekly Supply/Demand Report (and a long trade for the nimble)"
at $2.108 and now, fifteen minutes ahead of the EIA's storage report
we're sitting at $2.172 +0.054.; $640 to the good on each $2250 margin,
or 28% cash on cash profit.
No pressure.
We've counted the heating degree days and taken the pulse of market participants and....who knows.